Progress Energy 2008 Annual Report Download - page 107

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Progress Energy Annual Report 2008
PESC provides the majority of the affiliated services
under the approved agreements. Services provided by
PESC during 2008, 2007 and 2006 to PEC amounted to
$194 million, $182 million and $188 million, respectively,
and services provided to PEF were $160 million,
$174 million and $165 million, respectively.
PEC and PEF also provide and receive services at cost.
Services provided by PEC to PEF during 2008, 2007 and
2006 amounted to $44 million, $54 million and $34 million,
respectively. Services provided by PEF to PEC during 2008,
2007 and 2006 amounted to $12 million, $10 million and
$8 million, respectively.
PEC and PEF participate in an internal money pool,
operated by Progress Energy, to more effectively
utilize cash resources and to reduce outside short-
term borrowings. The money pool is also used to settle
intercompany balances. The weighted-average interest
rate for the money pool was 3.29%, 5.49% and 5.17% at
December 31, 2008, 2007 and 2006, respectively. Amounts
payable to the money pool are included in notes payable
to affiliated companies on the Balance Sheets. PEC and
PEF recorded insignificant interest expense related to the
money pool for all the years presented.
Progress Fuels sold coal to PEF at cost in 2007 and
2006. These intercompany revenues and expenses are
eliminated in consolidation; however, in accordance with
SFAS No. 71, profits on intercompany sales to regulated
affiliates are not eliminated if the sales price is reasonable
and the future recovery of sales price through the
ratemaking process is probable. Sales, net of insignificant
profits, if any, of $2 million and $321 million for the years
ended December 31, 2007 and 2006, respectively, are
included in fuel used in electric generation on the
Consolidated Statements of Income. In 2006, PEF began
entering into coal contracts on its own behalf.
19. FINANCIAL INFORMATION BY BUSINESS
SEGMENT
Our reportable PEC and PEF business segments are primarily
engaged in the generation, transmission, distribution and
sale of electricity in portions of North Carolina, South
Carolina and Florida. These electric operations also
distribute and sell electricity to other utilities, primarily in
the eastern United States.
In addition to the reportable operating segments, the
Corporate and Other segment includes the operations of
the Parent and PESC and other miscellaneous nonregulated
businesses that do not separately meet the quantitative
disclosure requirements of SFAS No. 131, “Disclosures
about Segments of an Enterprise and Related Information,”
as a separate business segment. The profit or loss of our
reportable segments plus the profit or loss of Corporate
and Other represents our total income from continuing
operations.
Products and services are sold between the various
reportable segments. All intersegment transactions are
at cost except for 2007 and 2006 transactions between
PEF and businesses included in the Corporate and Other
segment, which are at rates set by the FPSC. In accordance
with SFAS No. 71, profits on intercompany sales between
PEF and businesses included in the Corporate and Other
segment are not eliminated if the sales price is reasonable
and the future recovery of sales price through the ratemaking
process is probable. The profits realized for 2007 and 2006
were not significant.
In the following tables, capital and investment expenditures
include property additions, acquisitions of nuclear fuel and
other capital investments. Operational results and assets to
be divested are not included in the table presented below.